Consumer Law & Policy Blog

Am. Banker Reports CFPB Expected to Issue Third Party Debt Collection Rule by Early 2018

Here. It might even happen by the end of this year. Excerpt:

"Creditors should be responsible since they are our customers," said Dong Hong, vice president and senior counsel at the Consumer Bankers Association. "For the most part, we're fine with the disclosure regime the CFPB is creating.

WSJ Interview with Elizabeth Warren: Americans Don’t Want Less Regulation

Here.  She discusses the CFPB, among other things.

Predatory Auto Lending Times Report: The Car Was Repossessed, but the Debt Remains

Another important story from Jessica Silver-Greenberg & Michael Corkery here. I can't do justice to it with a brief excerpt, but see if this makes you want to read the whole piece (which you should):

More than a decade after Yvette Harris’s 1997 Mitsubishi was repossessed, she is still paying off her car loan.

She has no choice. Her auto lender took her to court and won the right to seize a portion of her income to cover her debt. The lender has so far been able to garnish $4,133 from her paychecks — a drain that at one point forced Ms. Harris, a single mother who lives in the Bronx, to go on public assistance to support her two sons.

* * *

A dealership in Queens refused to cancel Theresa Robinson’s loan of nearly $8,000 and give her a refund for a car that broke down days after she drove it off the lot.

Instead, Ms. Robinson, a Staten Island resident who is physically disabled and was desperate for a car to get to her doctors’ appointments, was told to pick a different car from the lot.

The second car she selected — a 2005 Chrysler Pacifica — eventually broke down as well. Unable to afford the loan payments after sinking thousands of dollars into repairs, Ms. Robinson defaulted.

Her subprime lender took her to court and won the right to garnish her income from babysitting her grandson to cover her loan payments.

* * *

“Essentially, the dealers are not selling cars. They are selling bad loans,” said Adam Taub, a lawyer in Detroit who has defended consumers in hundreds of these cases.

In rare move, feds reverse themselves on big arbitration case before the Supreme Court -- that is, the Trump SG's office takes a different position from the Obama SG's office

I'm guessing that a lot of our readers already know about this. But if you don't, read about it here in Amy Howe's post at scotusblog. Here's an excerpt from her post:

It is rare for the Office of the Solicitor General to change its position in a case before the Supreme Court after a change in administrations, even when the party in control of the White House changes. But that is exactly what happened last week. ... The about-face came in National Labor Relations Board v. Murphy Oil USA, in which the justices have agreed to decide whether agreements to forgo class actions or collective proceedings and instead resolve employer-employee disputes through individual arbitration are enforceable under the Federal Arbitration Act. In its petition for review on behalf of the NLRB, filed in September 2016, the Solicitor General’s office had argued that such agreements are not, because the National Labor Relations Act protects employees’ ability to engage in joint actions regarding the terms or conditions of their employment. On January 13, 2017, just seven days before the inauguration of President Donald Trump, the Supreme Court granted the NLRB’s petition, along with two others filed by employers (Ernst & Young LLP v. Morris and Epic Systems v. Lewis), and consolidated the three cases for one hour of oral argument.

 

Article Explains How Online Sellers Can Use Big Data to Personalize Prices

Mariateresa Maggiolino of Bocconi University has written Personalized Prices in European Competition Law.  Here is the abstract:

The advent of big data analysis techniques make personalized prices possible. This paper sketches a preliminary picture of this new phenomenon, first explaining how personalized prices flow from big data analysis, how personalized prices fit into the economic notion of price discrimination, how buyers perceive them, and how they affect consumer and social welfare. Then, seeking to square this new phenomenon with the existing legal framework, the article turns to the antitrust and contractual matters relevant to the quantum of personalized prices, as well as the unfair competition and privacy matters linked to the process whereby these prices are calculated and charged to consumers. The paper concludes that while personalized prices may give rise to some privacy concerns, from an antitrust perspective they very rarely harm the good functioning of the market insofar as it concerns variations in consumer welfare.

Is the opposition to Trumpcare too weak to stop it?

That's David Leonhardt's position in this column. Here's how it starts:

The Republican health care bill now sneaking its way through the Senate has a good chance of becoming law, even though it would do miserable damage. And it has a good chance partly because some of the bill’s most influential opponents have not had the courage of their convictions. I realize that sounds harsh. These opponents generally have good intentions. But they haven’t been very effective so far, and they don’t have much time to summon the courage to become more effective. The opponents I’m talking about include almost every major health care interest group: the lobbying groups for doctors, nurses and hospitals as well as advocates for patients with cancer, diabetes, lung disease, heart disease or birth defects. Each understands that the bill would deprive millions of Americans of insurance. Each has criticized the bill, and some, including AARP, have done more, like organizing phone calls. But they have not come close to the sort of public campaign that would put intense pressure on senators.

Leonhardt then goes on to describe what a hard-driving opposition campaign would look like.

Law360's Weinberger on How the Treasury's Review of the Community Reinvestment Act Worries Critics

Here.  Excerpt:

[T]he CRA only covers banks, not nonbank financial firms. That leads to an uneven playing field, said Jeffrey Naimon, a BuckleySandler LLP partner.

"Banks are asking why should a national nonbank mortgage lender have no CRA but a bank have a CRA requirement?" he said.

The National Community Reinvestment Coalition said it is pushing for that to be included in any update to the CRA.

* * *

"[Treasury Secretary Steven Mnuchin's] bank, OneWest, also had one of the worst community reinvestment records of all the banks that CRC analyzes in California, which raises questions about his motivation in 'reforming' the Community Reinvestment Act. Is he interested in reforming it to help communities, or to help the industry do even less?" said Paulina Gonzalez of the California Reinvestment Coalition.

Cordray Replies to Criticism by House Financial Services Staff

Reuters covers it here, and housing Wire here.  Both stories refer to a five-page letter from the Director.  According to the Reuters' story:

The [Committee staff] report said the CFPB had been an ineffective watchdog against Wells Fargo & Co, missing extensive improper sales practices and taking action only after work on the bank's unauthorized accounts scandal had been done by others.

The committee's report also depicted the CFPB as reluctant to cooperate with the panel's Well Fargo probe.

Cordray insisted that his agency had done critical work in policing Wells Fargo, and said the report "devolves into various misstatements and allegations" about the CFPB's work.

Update: the letter is here.

LA Times op-ed on televising Supreme Court arguments

Go here to read the op-ed by law prof. Eric Segall, 

A couple questions for our readers: Would you have liked to watch the argument in the Fair Debt Collection Act just decided by the Supreme Court, Henson v. Santandar Consumer USA, live on the Internet? Would you like to watch it now? Well, you couldn't watch live. And you can't watch it now -- or ever. That's because the Supreme Court doesn't permit it. A key reason given by the Justices is their worry that lawyers would play to the cameras, hurting the quality of oral argument. That seems possible to me, at least every once in a while.

But apparently lots of judges with experience disagree. And Segall said something I did not know: all state high courts have cameras in the courtroom. And some, like Texas, live-stream them. Segall quotes Texas Supreme Court Justice Tom Willett:

My court has been webcasting for a decade. No hiccups. No regrets. No going back. We inhabit a hyper-partisan age, and there's enormous civic-education upside in We the People seeing their judges tackle fateful issues with thoughtfulness and civility. I wouldn’t presume to lecture the Supreme Court of the United States, but our experience has been overwhelmingly positive.

He also responds to the concern from "some judges" that "televising court proceedings could make them targets of violence from disappointed litigants or the public at large" with a quote from Seventh Circuit judge Richard Posner:

As far as I am able to determine, there has never been an incidence of violence resulting from such televising. ... Yet fear of violence has been a standard excuse for refusing to allow judicial proceedings to be televised. Standard and phony.

 

 

More Analysis of Santander

The National Consumer Law Center (NCLC) has a useful discussion here on the implications of this week's Supreme Court decision in Henson v. Santander Consumer USA. NCLC's principal point is that Santander leaves open the possibility of proving that a debt buyer is a debt collector under the FDCPA's alternative definition, under which the term includes anyone whose principal business is collection of any debt, regardless of whether the debt is "owed or due another." The Court's decision in Santander was limited to the proposition that a debt buyer is not a debt collector under the prong of the definition applicable to someone who "regularly" collects debts "owed or due another"—because, according to the Court, debt buyers collect debts owed or due themselves.

I would add that Santander would appear to imply that if a debt buyer is a debt collector under the "principal purpose" definition, its collection activities are covered regardless of whether the debts were in default when it bought them. The reason for this conclusion is that the "exception" to the definitions under which it matters whether a debt was in default when it was "obtained" only applies to someone who is attempting to collect a debt that is "owed or due another." Santander's holding is that a debt buyer does not collect debts "owed or due another." Thus, if a person or company qualifies as a debt collector under the principal purpose definition (which doesn't depend on whom a debt is owed or due to), it will never fall within the exception for debts obtained before they went into default when it collects debts it bought, because such collection is of a debt owed or due itself.

Got that? If not, sit down with a copy of Santander, 15 U.S.C. § 1692a(6), and a good, stiff drink. The bottom line is that a lot now rides on whether a debt buyer's principal business is collecting debts.